Kenafric opens Sh100m biscuit line in Baba Dogo

Beverages and food company Kenafric Industries has opened a Sh100.7 million ($1 million) biscuit manufacturing line at its Baba Dogo factory.

The company has already hit the market with Goodie Bakers brand of biscuits, distributing it among small shops, supermarkets and kiosks in the country.

“We have invested in new machinery for the biscuit manufacturing. We bought equipment that produces about 20 tonnes a day and we have also expanded our warehousing,” said Kenafric Industries chief executive Mikul Shah in an interview.

The company is currently using about 50 per cent of its biscuit production capacity although it plans to “ramp up” in the coming months.

Mr Shah said Kenafric Industries’ funding for the new line came from the 2017 equity investment by Amethis Finance, a Paris-based company, and Metier, a South African private equity firm.

The two companies bought a 40 per cent stake, which was at the time estimated to have an annual turnover of about Sh10 billion.

External partner

This investment was the first time an external partner had been brought into the family-owned business.

However, the Shah family retained ownership of their stationary and footwear manufacturing business.

At the time, Kenafric said that it was going to use the funding to diversify its food business within East Africa.

Amethis and Metier said that with Kenafric at a “critical size,” it was well-poised to strengthen its presence in the market whose fragmentation offers “a unique opportunity for acquisitions’.

Under the Goodie Bakers brand, Kenafric is selling a milk-flavoured five-pack of biscuits and a ginger flavoured sachet of three biscuits. The company said it was targeting low-income consumers with the Sh5 packets.

'Limited cash'

“The Goodie Bakers biscuits are made to meet the needs of people with limited cash for spending,” said Mr Shah.

Kenafric is stepping into a sub-segment of the food business that could have hit a plateau in its growth phase.

Data from the Kenya National Bureau of Statistics shows that biscuit production fell 8.9 per cent in 2016 despite the 6.5 per cent overall growth in the food manufacturing industry.